<PAGE>

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS  EVIDENCED BY A LEGAL  OPINION OF COUNSEL TO THE  TRANSFEROR
REASONABLY  ACCEPTABLE  TO THE COMPANY TO SUCH  EFFECT,  THE  SUBSTANCE OF WHICH
SHALL BE REASONABLY  ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN
CONNECTION  WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED  BROKER-DEALER  OR
OTHER LOAN WITH A FINANCIAL  INSTITUTION  THAT IS AN  "ACCREDITED  INVESTOR"  AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

                          COMMON STOCK PURCHASE WARRANT


                To Purchase __________ Shares of Common Stock of

                     Industries International, Incorporated

                    THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") CERTIFIES
that, for value received, _____________ (the "Holder"), is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date of issuance of this Warrant (the
"Initial Exercise Date") and on or prior to the third anniversary of the Initial
Exercise Date (the "Termination Date") but not thereafter, to subscribe for and
purchase from Industries International, Incorporated, a Nevada corporation (the
"Company"), up to ____________ shares (the "Warrant Shares") of Common Stock,
par value $0.01 per share, of the Company (the "Common Stock"). The purchase
price of one share of Common Stock (the "Exercise Price") under this Warrant
shall be $2.7601 subject to adjustment hereunder. The Exercise Price and the
number of Warrant Shares for which the Warrant is exercisable shall be subject
to adjustment as provided herein. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the "Purchase Agreement"), dated February 25, 2004, among
the Company and the purchasers signatory thereto.


                                       1
<PAGE>

         1.  Title to  Warrant.  Prior to the  Termination  Date and  subject to
compliance with applicable laws and Section 7 of this Warrant,  this Warrant and
all rights  hereunder  are  transferable,  in whole or in part, at the office or
agency of the  Company by the Holder in person or by duly  authorized  attorney,
upon surrender of this Warrant  together with the Assignment Form annexed hereto
properly  endorsed.  The transferee shall sign an investment  letter in form and
substance reasonably satisfactory to the Company.

         2.  Authorization  of Shares.  The Company  covenants  that all Warrant
Shares which may be issued upon the exercise of the purchase rights  represented
by this Warrant will, upon exercise of the purchase  rights  represented by this
Warrant,  be duly authorized,  validly issued,  fully paid and nonassessable and
free from all taxes,  liens and charges in respect of the issue  thereof  (other
than taxes in  respect of any  transfer  occurring  contemporaneously  with such
issue).

         3. Exercise of Warrant.

                  (a)  Exercise  of the  purchase  rights  represented  by  this
         Warrant  may be made at any  time or  times  on or  after  the  Initial
         Exercise Date and on or before the Termination  Date by delivery to the
         Company of a duly  executed  facsimile  copy of the Notice of  Exercise
         Form  annexed  hereto (or such other office or agency of the Company as
         it may designate by notice in writing to the  registered  Holder at the
         address  of  such  Holder  appearing  on the  books  of  the  Company);
         provided,  however,  within 5 Trading  Days of the date said  Notice of
         Exercise is delivered to the Company, the Holder shall have surrendered
         this Warrant to the Company and the Company shall have received payment
         of the aggregate Exercise Price of the shares thereby purchased by wire
         transfer or cashier's check drawn on a United States bank. Certificates
         for shares purchased  hereunder shall be delivered to the Holder within
         the earlier of (i) 5 Trading Days after the date on which the Notice of
         Exercise  shall have been delivered by facsimile copy or (ii) 3 Trading
         Days from the delivery to the Company of the Notice of Exercise Form by
         facsimile copy,  surrender of this Warrant and payment of the aggregate
         Exercise  Price as set forth above  ("Warrant  Share  Delivery  Date");
         provided,  however,  in the event the Warrant is not surrendered or the
         aggregate  Exercise  Price  is not  received  by the  Company  within 5
         Trading  Days after the date on which the Notice of  Exercise  shall be
         delivered by facsimile  copy,  the Warrant Share Delivery Date shall be
         extended  to the extent  such 5 Trading  Day period is  exceeded.  This
         Warrant shall be deemed to have been exercised on the later of the date
         the Notice of Exercise is delivered  to the Company by  facsimile  copy
         and the date the Exercise Price is received by the Company. The Warrant
         Shares  shall be deemed to have been  issued,  and  Holder or any other
         person so designated to be named therein shall be deemed to have become
         a holder of record of such shares for all purposes,  as of the date the
         Warrant has been  exercised  by payment to the Company of the  Exercise
         Price and all taxes required to be paid by the Holder, if any, pursuant
         to Section 5 prior to the issuance of such shares,  have been paid.  If

                                       2
<PAGE>

         the  Company  fails  to  deliver  to  the  Holder  a   certificate   or
         certificates  representing  the Warrant Shares pursuant to this Section
         3(a) by the third  Trading Day  following  the Warrant  Share  Delivery
         Date, then the Holder will have the right to rescind such exercise.  In
         addition to any other rights  available  to the Holder,  if the Company
         fails  to  deliver  to  the  Holder  a  certificate   or   certificates
         representing  the Warrant  Shares  pursuant to an exercise by the third
         Trading Day after the Warrant Share  Delivery  Date,  and if after such
         day the Holder is required by its broker to purchase (in an open market
         transaction  or  otherwise)  shares  of  Common  Stock  to  deliver  in
         satisfaction  of a sale by the Holder of the Warrant  Shares  which the
         Holder anticipated receiving upon such exercise (a "Buy-In"),  then the
         Company shall (1) pay in cash to the Holder the amount by which (x) the
         Holder's total purchase price (including brokerage commissions, if any)
         for the  shares of Common  Stock so  purchased  exceeds  (y) the amount
         obtained  by  multiplying  (A) the  number of Warrant  Shares  that the
         Company was  required to deliver to the Holder in  connection  with the
         exercise  at issue  times (B) the price at which the sell order  giving
         rise to such purchase obligation was executed, and (2) at the option of
         the Holder,  either reinstate the portion of the Warrant and equivalent
         number of Warrant  Shares for which such  exercise  was not  honored or
         deliver to the  Holder the number of shares of Common  Stock that would
         have been issued had the Company timely  complied with its exercise and
         delivery  obligations  hereunder.  For example, if the Holder purchases
         Common Stock having a total purchase price of $11,000 to cover a Buy-In
         with respect to an attempted exercise of shares of Common Stock with an
         aggregate  sale  price  giving  rise to  such  purchase  obligation  of
         $10,000,  under clause (1) of the  immediately  preceding  sentence the
         Company  shall be required to pay the Holder  $1,000.  The Holder shall
         provide the Company  written notice  indicating the amounts  payable to
         the  Holder  in  respect  of  the  Buy-In,   together  with  applicable
         confirmations and other evidence  reasonably  requested by the Company.
         Nothing  herein  shall  limit a  Holder's  right to  pursue  any  other
         remedies  available  to it  hereunder,  at law or in equity  including,
         without limitation,  a decree of specific performance and/or injunctive
         relief  with  respect  to  the  Company's  failure  to  timely  deliver
         certificates  representing  shares of Common Stock upon exercise of the
         Warrant as required pursuant to the terms hereof.

                  (b) If this Warrant  shall have been  exercised  in part,  the
         Company  shall,   at  the  time  of  delivery  of  the  certificate  or
         certificates  representing  Warrant  Shares,  deliver  to  Holder a new
         Warrant  evidencing  the rights of Holder to purchase  the  unpurchased
         Warrant  Shares called for by this Warrant,  which new Warrant shall in
         all other respects be identical with this Warrant.

                  (c) The  Holder  shall  not have the  right  to  exercise  any
         portion of this Warrant,  pursuant to Section 3(a) or otherwise, to the
         extent that after giving effect to such issuance  after  exercise,  the
         Holder  (together  with the Holder's  affiliates),  as set forth on the
         applicable  Notice of  Exercise,  would  beneficially  own in excess of
         4.99%  of  the  number  of  shares  of  the  Common  Stock  outstanding
         immediately  after giving effect to such issuance.  For purposes of the
         foregoing  sentence,  the number of shares of Common Stock beneficially
         owned by the  Holder and its  affiliates  shall  include  the number of
         shares of Common  Stock  issuable  upon  exercise of this  Warrant with
         respect to which the  determination of such sentence is being made, but
         shall  exclude  the  number of shares of Common  Stock  which  would be
         issuable upon (A) exercise of the  remaining,  nonexercised  portion of
         this Warrant  beneficially owned by the Holder or any of its affiliates
         and (B)  exercise or  conversion  of the  unexercised  or  nonconverted
         portion of any other  securities  of the  Company  (including,  without
         limitation,  any other Warrants)  subject to a limitation on conversion
         or exercise analogous to the limitation  contained herein  beneficially

                                       3
<PAGE>

         owned by the  Holder or any of its  affiliates.  Except as set forth in
         the preceding sentence,  for purposes of this Section 3(c),  beneficial
         ownership  shall be calculated in accordance  with Section 13(d) of the
         Exchange Act, it being  acknowledged  by Holder that the Company is not
         representing  to Holder that such  calculation  is in  compliance  with
         Section 13(d) of the Exchange Act and Holder is solely  responsible for
         any  schedules  required to be filed in  accordance  therewith.  To the
         extent that the limitation  contained in this Section 3(c) applies, the
         determination  of whether this Warrant is  exercisable  (in relation to
         other  securities  owned by the  Holder) and of which a portion of this
         Warrant is exercisable  shall be in the sole discretion of such Holder,
         and the  submission of a Notice of Exercise  shall be deemed to be such
         Holder's  determination  of whether  this  Warrant is  exercisable  (in
         relation to other securities owned by such Holder) and of which portion
         of this Warrant is exercisable,  in each case subject to such aggregate
         percentage  limitation,  and the Company  shall have no  obligation  to
         verify or confirm the accuracy of such  determination.  For purposes of
         this Section 3(c), in determining  the number of outstanding  shares of
         Common Stock,  the Holder may rely on the number of outstanding  shares
         of Common Stock as reflected in (x) the Company's most recent Form 10-Q
         or Form 10-K, as the case may be, (y) a more recent public announcement
         by the Company or (z) any other notice by the Company or the  Company's
         Transfer  Agent  setting  forth the  number  of shares of Common  Stock
         outstanding.  Upon the  written  or oral  request  of the  Holder,  the
         Company shall within two Trading Days confirm  orally and in writing to
         the Holder the number of shares of Common  Stock then  outstanding.  In
         any case,  the number of  outstanding  shares of Common  Stock shall be
         determined  after  giving  effect  to the  conversion  or  exercise  of
         securities of the Company, including this Warrant, by the Holder or its
         affiliates since the date as of which such number of outstanding shares
         of Common Stock was reported.

                  (d) If at any time after one year from the date of issuance of
         this Warrant there is no effective  Registration  Statement registering
         the resale of the Warrant  Shares by the Holder,  this Warrant may also
         be  exercised  at such time by means of a "cashless  exercise" in which
         the Holder shall be entitled to receive a certificate for the number of
         Warrant Shares equal to the quotient  obtained by dividing  [(A-B) (X)]
         by (A), where:

                  (A) =    the VWAP on the Trading Day  immediately  preceding
                           the date of such election;

                  (B) =    the Exercise  Price of this  Warrant,  as adjusted;
                           and

                  (X) =    the number of Warrant Shares issuable upon exercise
                           of this Warrant in accordance  with the terms of this
                           Warrant  by means of a cash  exercise  rather  than a
                           cashless exercise.

                  (e) Subject to the  provisions of this Section 3, if after the
         Effective Date the VWAP for each of ten  consecutive  Trading Days (the
         "Measurement  Price", which period shall not have commenced until after
         the  Effective  Date)  exceeds  the then  Exercise  Price  (subject  to
         adjustment as set forth herein) (the  "Threshold  Price") by 200%, then
         the Company  may,  within two  Trading  Days of such  period,  call for
         cancellation  of all or any portion of this  Warrant for which a Notice
         of Exercise  has not yet been  delivered  (such  right,  a "Call").  To
         exercise  this  right,  the  Company  must  deliver  to the  Holder  an

                                       4
<PAGE>

         irrevocable  written notice (a "Call Notice"),  indicating  therein the
         portion of  unexercised  portion of this  Warrant to which such  notice
         applies.  If the conditions set forth below for such Call are satisfied
         from the period from the date of the Call Notice  through and including
         the Call Date (as  defined  below),  then any  portion of this  Warrant
         subject to such Call  Notice for which a Notice of  Exercise  shall not
         have been  received  from and after the date of the Call Notice will be
         cancelled  at 6:30 p.m.  (New York City time) on the tenth  Trading Day
         after the date the Call Notice is  received  by the Holder  (such date,
         the "Call Date"). Any unexercised  portion of this Warrant to which the
         Call Notice does not pertain will be unaffected by such Call Notice. In
         furtherance  thereof,  the  Company  covenants  and agrees that it will
         honor all Notices of Exercise with respect to Warrant Shares subject to
         a Call Notice that are  tendered  from the time of delivery of the Call
         Notice  through  6:30 p.m.  (New York City time) on the Call Date.  The
         parties  agree that any Notice of Exercise  delivered  following a Call
         Notice shall first reduce to zero the number of Warrant  Shares subject
         to such Call Notice  prior to reducing  the  remaining  Warrant  Shares
         available  for purchase  under this Warrant.  For example,  if (x) this
         Warrant  then permits the Holder to acquire 100 Warrant  Shares,  (y) a
         Call Notice pertains to 75 Warrant  Shares,  and (z) prior to 6:30 p.m.
         (New York City  time) on the Call Date the  Holder  tenders a Notice of
         Exercise in respect of 50 Warrant Shares, then (1) on the Call Date the
         right  under  this  Warrant  to  acquire  25  Warrant  Shares  will  be
         automatically  cancelled,  (2) the  Company,  in the  time  and  manner
         required  under this  Warrant,  will have issued and  delivered  to the
         Holder 50 Warrant Shares in respect of the exercises  following receipt
         of the Call Notice, and (3) the Holder may, until the Termination Date,
         exercise this Warrant for 25 Warrant  Shares  (subject to adjustment as
         herein provided and subject to subsequent Call Notices).  Subject again
         to the  provisions  of this  Section  3(e),  the  Company  may  deliver
         subsequent  Call  Notices for any portion of this Warrant for which the
         Holder shall not have  delivered a Notice of Exercise.  Notwithstanding
         anything to the contrary set forth in this Warrant, the Company may not
         deliver a Call Notice or require the  cancellation of this Warrant (and
         any Call Notice will be void),  unless,  from the beginning of the 10th
         consecutive Trading Days used to determine whether the Common Stock has
         achieved the  Threshold  Price  through the Call Date,  (i) the Company
         shall have  honored in  accordance  with the terms of this  Warrant all
         Notices of Exercise  delivered by 6:30 p.m. (New York City time) on the
         Call Date, (ii) the Registration Statement shall be effective as to all
         Warrant Shares and the prospectus  thereunder  available for use by the
         Holder for the resale of all such  Warrant  Shares and (iii) the Common
         Stock shall be listed or quoted for trading on the Trading Market.  The
         Company's  right to Call the Warrant  shall be exercised  ratably among
         the Purchasers  based on each  Purchaser's  initial  purchase of Common
         Stock pursuant to the Purchase Agreement.


         4. No  Fractional  Shares  or  Scrip.  No  fractional  shares  or scrip
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant.  As to any fraction of a share which Holder would otherwise be entitled
to purchase  upon such  exercise,  the Company  shall pay a cash  adjustment  in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

                                       5
<PAGE>

         5. Charges,  Taxes and Expenses.  Issuance of certificates  for Warrant
Shares shall be made without  charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate,  all
of which taxes and expenses shall be paid by the Company,  and such certificates
shall be  issued  in the name of the  Holder  or in such name or names as may be
directed by the Holder;  provided,  however,  that in the event certificates for
Warrant  Shares are to be issued in a name  other  than the name of the  Holder,
this  Warrant  when  surrendered  for  exercise  shall  be  accompanied  by  the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.

         6. Closing of Books.  The Company will not close its stockholder  books
or records in any manner  which  prevents the timely  exercise of this  Warrant,
pursuant to the terms hereof.

         7. Transfer, Division and Combination.

                  (a) Subject to compliance with any applicable  securities laws
         and the  conditions  set forth in Sections 1 and 7(e) hereof and to the
         provisions of Section 4.1 of the Purchase  Agreement,  this Warrant and
         all  rights  hereunder  are  transferable,  in whole  or in part,  upon
         surrender  of this  Warrant  at the  principal  office of the  Company,
         together with a written assignment of this Warrant substantially in the
         form  attached  hereto  duly  executed  by the  Holder  or its agent or
         attorney and funds  sufficient  to pay any transfer  taxes payable upon
         the making of such transfer. Upon such surrender and, if required, such
         payment,  the  Company  shall  execute  and  deliver a new  Warrant  or
         Warrants  in  the  name  of  the  assignee  or  assignees  and  in  the
         denomination   or   denominations   specified  in  such  instrument  of
         assignment,  and shall issue to the  assignor a new Warrant  evidencing
         the portion of this  Warrant not so assigned,  and this  Warrant  shall
         promptly  be  cancelled.  A  Warrant,  if  properly  assigned,  may  be
         exercised  by a new holder for the purchase of Warrant  Shares  without
         having a new Warrant issued.

                  (b)  This  Warrant  may be  divided  or  combined  with  other
         Warrants  upon  presentation  hereof  at the  aforesaid  office  of the
         Company,  together  with a  written  notice  specifying  the  names and
         denominations  in which new  Warrants  are to be issued,  signed by the
         Holder or its agent or  attorney.  Subject to  compliance  with Section
         7(a),  as to any  transfer  which may be involved  in such  division or
         combination,  the  Company  shall  execute and deliver a new Warrant or
         Warrants  in  exchange  for the  Warrant or  Warrants  to be divided or
         combined in accordance with such notice.

                  (c) The Company  shall  prepare,  issue and deliver at its own
         expense  (other than transfer  taxes) the new Warrant or Warrants under
         this Section 7.

                  (d) The Company agrees to maintain,  at its aforesaid  office,
         books for the  registration  and the  registration  of  transfer of the
         Warrants.

                                       6
<PAGE>

                  (e) If,  at the  time of the  surrender  of  this  Warrant  in
         connection  with any  transfer of this  Warrant,  the  transfer of this
         Warrant shall not be registered  pursuant to an effective  registration
         statement  under  the  Securities  Act  and  under   applicable   state
         securities or blue sky laws, the Company may require, as a condition of
         allowing  such  transfer  (i) that the  Holder  or  transferee  of this
         Warrant,  as the case may be, furnish to the Company a written  opinion
         of  counsel  (which  opinion  shall be in  form,  substance  and  scope
         customary  for opinions of counsel in comparable  transactions)  to the
         effect that such  transfer may be made without  registration  under the
         Securities Act and under  applicable state securities or blue sky laws,
         (ii) that the holder or  transferee  execute and deliver to the Company
         an investment  letter in form and  substance  acceptable to the Company
         and (iii) that the transferee be an "accredited investor" as defined in
         Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the
         Securities  Act or a qualified  institutional  buyer as defined in Rule
         144A(a) under the Securities Act.

         8. No Rights as  Shareholder  until  Exercise.  This  Warrant  does not
entitle the Holder to any voting rights or other rights as a shareholder  of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate  Exercise  Price (or by means of a cashless  exercise),
the  Warrant  Shares  so  purchased  shall be and be deemed to be issued to such
Holder as the record  owner of such  shares as of the close of  business  on the
later of the date of such surrender or payment.

         9. Loss,  Theft,  Destruction  or  Mutilation  of Warrant.  The Company
covenants that upon receipt by the Company of evidence  reasonably  satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate  relating  to the  Warrant  Shares,  and in case of  loss,  theft or
destruction,  of indemnity or security reasonably  satisfactory to it (which, in
the case of the  Warrant,  shall not include the posting of any bond),  and upon
surrender and cancellation of such Warrant or stock  certificate,  if mutilated,
the Company  will make and deliver a new  Warrant or stock  certificate  of like
tenor  and  dated  as of such  cancellation,  in lieu of such  Warrant  or stock
certificate.

         10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the  taking of any action or the  expiration  of any right  required  or granted
herein shall be a Saturday,  Sunday or a legal holiday,  then such action may be
taken or such right may be exercised on the next  succeeding day not a Saturday,
Sunday or legal holiday.

         11. Adjustments of Exercise Price and Number of Warrant Shares.

                  (a) Stock  Splits,  etc.  The  number  and kind of  securities
         purchasable  upon the exercise of this  Warrant and the Exercise  Price
         shall be subject to adjustment  from time to time upon the happening of
         any of the  following.  In case the Company shall (i) pay a dividend in
         shares of Common Stock or make a distribution in shares of Common Stock
         to  holders  of  its  outstanding  Common  Stock,  (ii)  subdivide  its
         outstanding  shares of Common  Stock  into a greater  number of shares,
         (iii)  combine its  outstanding  shares of Common  Stock into a smaller
         number  of  shares of Common  Stock,  or (iv)  issue any  shares of its
         capital  stock in a  reclassification  of the  Common  Stock,  then the

                                       7
<PAGE>

         number of Warrant  Shares  purchasable  upon  exercise of this  Warrant
         immediately prior thereto shall be adjusted so that the Holder shall be
         entitled  to receive  the kind and  number of  Warrant  Shares or other
         securities  of the  Company  which it  would  have  owned or have  been
         entitled to receive had such Warrant been exercised in advance thereof.
         Upon each such  adjustment of the kind and number of Warrant  Shares or
         other  securities of the Company which are purchasable  hereunder,  the
         Holder shall  thereafter  be entitled to purchase the number of Warrant
         Shares  or  other  securities  resulting  from  such  adjustment  at an
         Exercise  Price  per  Warrant  Share  or  other  security  obtained  by
         multiplying  the  Exercise  Price in effect  immediately  prior to such
         adjustment by the number of Warrant Shares purchasable  pursuant hereto
         immediately  prior to such  adjustment  and  dividing  by the number of
         Warrant Shares or other  securities of the Company that are purchasable
         pursuant hereto  immediately after such adjustment.  An adjustment made
         pursuant to this paragraph shall become effective immediately after the
         effective  date of such event  retroactive  to the record date, if any,
         for such event.

                  (b) Anti-Dilution Provisions.  During the Exercise Period, the
         Exercise  Price  shall be  subject to  adjustment  from time to time as
         provided in this Section 11(b). In the event that any adjustment of the
         Exercise Price as required herein results in a fraction of a cent, such
         Exercise Price shall be rounded up or down to the nearest cent.

                           (i) Adjustment of Exercise Price. If and whenever the
                  Company  issues  or  sells,  or  in  accordance  with  Section
                  11(b)(ii)  hereof is deemed to have issued or sold, any shares
                  of Common  Stock for an effective  consideration  per share of
                  less  than the  then  Exercise  Price or for no  consideration
                  (such lower price,  the "Base Share Price" and such  issuances
                  collectively, a "Dilutive Issuance"), then, the Exercise Price
                  shall be multiplied by a fraction of which the numerator shall
                  be  the   number  of  shares  of  Common   Stock   Outstanding
                  immediately  prior to the Dilutive Issuance plus the number of
                  shares of Common Stock which the aggregate  offering price for
                  such Dilutive Issuance (assuming receipt by the Corporation in
                  full  of all  consideration  payable  upon  exercise  of  such
                  rights,  options or warrants)  would  purchase at the Exercise
                  Price,  and the  denominator  of which shall be the sum of the
                  number of shares of Common Stock Outstanding immediately prior
                  to the Dilutive  Issuance  plus the number of shares of Common
                  Stock so issued or issuable in  connection  with the  Dilutive
                  Issuance.  Such adjustment  shall be made whenever such shares
                  of Common Stock or Capital Share  Equivalents are issued.  For
                  purposes of this Section 11(b),  "Common Stock Outstanding" as
                  of a given date shall be the number of shares of Common  Stock
                  (excluding treasury shares, if any) issued and outstanding.

                           (ii) Effect on Exercise Price of Certain Events.  For
                  purposes of  determining  the  adjusted  Exercise  Price under
                  Section 11(b) hereof, the following will be applicable:

                                    (A)  Issuance of Rights or  Options.  If the
                           Company in any manner  issues or grants any warrants,
                           rights  or  options,   whether  or  not   immediately
                           exercisable,  to subscribe for or to purchase  Common
                           Stock or Common  Stock  Equivalents  (such  warrants,
                           rights and options to purchase Common Stock or Common
                           Stock  Equivalents  are  hereinafter  referred  to as
                           "Options")  and the  effective  price  per  share for

                                       8
<PAGE>

                           which Common  Stock is issuable  upon the exercise of
                           such Options is less than the Exercise  Price ("Below
                           Base Price  Options"),  then the maximum total number
                           of shares of Common Stock  issuable upon the exercise
                           of all such Below Base Price Options  (assuming  full
                           exercise,  conversion  or  exchange  of Common  Stock
                           Equivalents,  if applicable)  will, as of the date of
                           the  issuance  or  grant  of such  Below  Base  Price
                           Options, be deemed to be outstanding and to have been
                           issued  and sold by the  Company  for such  price per
                           share and the  maximum  consideration  payable to the
                           Company upon such exercise  (assuming  full exercise,
                           conversion  or exchange of Common Stock  Equivalents,
                           if  applicable)  will be deemed to have been received
                           by  the  Company.   For  purposes  of  the  preceding
                           sentence,  the  "effective  price per share for which
                           Common  Stock is issuable  upon the  exercise of such
                           Below Base Price  Options" is  determined by dividing
                           (i) the total amount,  if any, received or receivable
                           by the Company as  consideration  for the issuance or
                           granting of all such Below Base Price  Options,  plus
                           the   minimum    aggregate   amount   of   additional
                           consideration,  if any,  payable to the Company  upon
                           the  exercise  of all such Below Base Price  Options,
                           plus,  in  the  case  of  Common  Stock   Equivalents
                           issuable  upon the  exercise of such Below Base Price
                           Options,  the minimum  aggregate amount of additional
                           consideration  payable upon the exercise,  conversion
                           or  exchange  thereof at the time such  Common  Stock
                           Equivalents first become exercisable,  convertible or
                           exchangeable,  by (ii) the  maximum  total  number of
                           shares of Common Stock  issuable upon the exercise of
                           all such  Below  Base Price  Options  (assuming  full
                           conversion   of   Common   Stock   Equivalents,    if
                           applicable).  No further  adjustment  to the Exercise
                           Price will be made upon the actual  issuance  of such
                           Common  Stock  upon the  exercise  of such Below Base
                           Price  Options or upon the  exercise,  conversion  or
                           exchange of Common Stock  Equivalents  issuable  upon
                           exercise of such Below Base Price Options.

                                    (B) Issuance of Common Stock Equivalents. If
                           the Company in any manner  issues or sells any Common
                           Stock   Equivalents,   whether  or  not   immediately
                           convertible  (other than where the same are  issuable
                           upon the exercise of Options) and the effective price
                           per share for which  Common  Stock is  issuable  upon
                           such  exercise,  conversion  or exchange is less than
                           the Exercise Price,  then the maximum total number of
                           shares of Common Stock  issuable  upon the  exercise,
                           conversion  or  exchange  of all  such  Common  Stock
                           Equivalents  will,  as of the date of the issuance of
                           such  Common  Stock  Equivalents,  be  deemed  to  be
                           outstanding  and to have been  issued and sold by the
                           Company  for such  price per  share  and the  maximum
                           consideration   payable  to  the  Company  upon  such
                           exercise  (assuming  full  exercise,   conversion  or
                           exchange of Common Stock Equivalents,  if applicable)
                           will be deemed to have been  received by the Company.
                           For  the  purposes  of the  preceding  sentence,  the
                           "effective  price per share for which Common Stock is
                           issuable upon such exercise,  conversion or exchange"
                           is determined  by dividing (i) the total  amount,  if

                                       9
<PAGE>

                           any,   received  or  receivable  by  the  Company  as
                           consideration  for the  issuance  or sale of all such
                           Common Stock Equivalents,  plus the minimum aggregate
                           amount of additional  consideration,  if any, payable
                           to the  Company  upon  the  exercise,  conversion  or
                           exchange  thereof  at  the  time  such  Common  Stock
                           Equivalents first become exercisable,  convertible or
                           exchangeable,  by (ii) the  maximum  total  number of
                           shares of Common Stock  issuable  upon the  exercise,
                           conversion  or  exchange  of all  such  Common  Stock
                           Equivalents.  No further  adjustment  to the Exercise
                           Price will be made upon the actual  issuance  of such
                           Common Stock upon exercise, conversion or exchange of
                           such Common Stock Equivalents.

                                    (C)  Change  in Option  Price or  Conversion
                           Rate.  If there  is a  change  at any time in (i) the
                           amount of  additional  consideration  payable  to the
                           Company upon the  exercise of any  Options;  (ii) the
                           amount of additional  consideration,  if any, payable
                           to the  Company  upon  the  exercise,  conversion  or
                           exchange of any Common  Stock  Equivalents;  or (iii)
                           the rate at which any Common  Stock  Equivalents  are
                           convertible into or exchangeable for Common Stock (in
                           each  such  case,  other  than  under or by reason of
                           provisions designed to protect against dilution), the
                           Exercise  Price in effect at the time of such  change
                           will be readjusted to the Exercise  Price which would
                           have been in effect at such time had such  Options or
                           Common Stock Equivalents  still outstanding  provided
                           for such changed additional  consideration or changed
                           conversion  rate,  as the  case  may be,  at the time
                           initially granted, issued or sold.

                                    (D) Calculation of  Consideration  Received.
                           If  any  Common   Stock,   Options  or  Common  Stock
                           Equivalents are issued, granted or sold for cash, the
                           consideration  received therefor for purposes of this
                           Warrant  will be the amount  received  by the Company
                           therefor, before deduction of reasonable commissions,
                           underwriting   discounts  or   allowances   or  other
                           reasonable  expenses  paid or incurred by the Company
                           in connection  with such issuance,  grant or sale. In
                           case  any  Common  Stock,  Options  or  Common  Stock
                           Equivalents  are  issued or sold for a  consideration
                           part or all of which  shall be other than  cash,  the
                           amount of the consideration  other than cash received
                           by the Company  will be the fair market value of such
                           consideration,   except   where  such   consideration
                           consists of  securities,  in which case the amount of
                           consideration  received  by the  Company  will be the
                           fair market value  (closing  bid price,  if traded on
                           any  market)  thereof as of the date of  receipt.  In
                           case  any  Common  Stock,  Options  or  Common  Stock
                           Equivalents  are issued in connection with any merger
                           or   consolidation   in  which  the  Company  is  the
                           surviving  corporation,  the amount of  consideration
                           therefor  will be deemed to be the fair market  value

                                       10
<PAGE>

                           of such portion of the net assets and business of the
                           non-surviving  corporation as is attributable to such
                           Common Stock, Options or Common Stock Equivalents, as
                           the  case  may  be.  The  fair  market  value  of any
                           consideration  other than cash or securities  will be
                           determined in good faith by an  investment  banker or
                           other  appropriate  expert  of  national   reputation
                           selected by the Company and reasonably  acceptable to
                           the holder  hereof,  with the costs of such appraisal
                           to be borne by the Company.

                                    (E)  Exceptions  to  Adjustment  of Exercise
                           Price.  Notwithstanding the foregoing,  no adjustment
                           will be made under this  Section  11(b) in respect of
                           (1) the  granting  of stock or options to  employees,
                           officers,  directors or key  consultants  pursuant to
                           any equity  incentive  plan duly adopted by the Board
                           of  Directors  of the  Company or a  majority  of the
                           members of a committee of directors  established  for
                           such   purpose  or  (2)  upon  the   exercise  of  or
                           conversion of any Common Stock Equivalents or Options
                           issued and  outstanding  on the Original  Issue Date,
                           provided  that the  securities  have not been amended
                           since the date of the Purchase  Agreement except as a
                           result of the Purchase Agreement.

                           (iii)  Minimum   Adjustment  of  Exercise  Price.  No
                  adjustment of the Exercise Price shall be made in an amount of
                  less than 1% of the Exercise  Price in effect at the time such
                  adjustment  is  otherwise  required  to be made,  but any such
                  lesser  adjustment  shall be carried forward and shall be made
                  at the time and together with the next  subsequent  adjustment
                  which, together with any adjustments so carried forward, shall
                  amount to not less than 1% of such Exercise Price.

         12.   Reorganization,   Reclassification,   Merger,   Consolidation  or
Disposition  of  Assets.  In case the  Company  shall  reorganize  its  capital,
reclassify  its  capital  stock,  consolidate  or  merge  with or  into  another
corporation  (where the Company is not the surviving  corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell,  transfer or otherwise  dispose of its property,  assets or business to
another  corporation  and,  pursuant  to  the  terms  of  such   reorganization,
reclassification,  merger,  consolidation  or disposition  of assets,  shares of
common stock of the successor or acquiring  corporation,  or any cash, shares of
stock or other  securities  or  property  of any  nature  whatsoever  (including
warrants or other  subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring  corporation ("Other Property"),  are
to be received by or  distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive, at the option of the
Holder, (a) upon exercise of this Warrant,  the number of shares of Common Stock
of the  successor  or  acquiring  corporation  or of the  Company,  if it is the
surviving corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to such  event or (b) cash equal to the value of
this Warrant as determined in accordance  with the Black Scholes  option pricing
formula.  In  case  of  any  such  reorganization,   reclassification,   merger,
consolidation or disposition of assets,  the successor or acquiring  corporation
(if  other  than  the  Company)  shall  expressly  assume  the due and  punctual
observance  and  performance  of each and every  covenant and  condition of this
Warrant to be performed and observed by the Company and all the  obligations and
liabilities   hereunder,   subject  to  such  modifications  as  may  be  deemed

                                       1
<PAGE>

appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for  adjustments of Warrant Shares for which
this Warrant is exercisable  which shall be as nearly  equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this Section
12, "common stock of the successor or acquiring corporation" shall include stock
of such  corporation  of any class which is not  preferred  as to  dividends  or
assets  over any  other  class of stock  of such  corporation  and  which is not
subject to  redemption  and shall also include any  evidences  of  indebtedness,
shares of stock or other  securities  which are convertible into or exchangeable
for any such stock,  either  immediately or upon the arrival of a specified date
or the  happening  of a  specified  event and any  warrants  or other  rights to
subscribe  for or purchase  any such stock.  The  foregoing  provisions  of this
Section   12   shall    similarly    apply   to   successive    reorganizations,
reclassifications, mergers, consolidations or disposition of assets.

         13.  Voluntary  Adjustment by the Company.  The Company may at any time
during the term of this Warrant  reduce the then current  Exercise  Price to any
amount and for any period of time deemed  appropriate  by the Board of Directors
of the Company.

         14.  Notice of  Adjustment.  Whenever  the number of Warrant  Shares or
number or kind of securities or other property  purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided,  the Company
shall give notice thereof to the Holder,  which notice shall state the number of
Warrant Shares (and other securities or property)  purchasable upon the exercise
of this  Warrant  and the  Exercise  Price of such  Warrant  Shares  (and  other
securities or property) after such  adjustment,  setting forth a brief statement
of the facts  requiring  such  adjustment  and setting forth the  computation by
which such adjustment was made.

         15. Notice of Corporate Action. If at any time:

                  (a) the  Company  shall  take a record of the  holders  of its
         Common Stock for the purpose of entitling them to receive a dividend or
         other  distribution,  or any right to  subscribe  for or  purchase  any
         evidences of its indebtedness,  any shares of stock of any class or any
         other securities or property, or to receive any other right, or

                  (b) there shall be any capital  reorganization of the Company,
         any  reclassification  or  recapitalization of the capital stock of the
         Company or any  consolidation  or merger of the  Company  with,  or any
         sale,  transfer or other  disposition of all or  substantially  all the
         property, assets or business of the Company to, another corporation or,

                  (c) there shall be a  voluntary  or  involuntary  dissolution,
         liquidation or winding up of the Company;

then, in any one or more of such cases,  the Company shall give to Holder (i) at
least 10 days' prior written  notice of the date on which a record date shall be
selected for such dividend,  distribution or right or for determining  rights to
vote  in  respect  of  any  such   reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 10

                                       12
<PAGE>

days'  prior  written  notice of the date when the same shall take  place.  Such
notice in accordance  with the foregoing  clause also shall specify (i) the date
on which  any such  record  is to be taken  for the  purpose  of such  dividend,
distribution  or right,  the date on which the holders of Common  Stock shall be
entitled  to any such  dividend,  distribution  or  right,  and the  amount  and
character  thereof,  and  (ii)  the  date  on  which  any  such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution,  liquidation  or winding  up is to take place and the time,  if any
such  time is to be fixed,  as of which the  holders  of Common  Stock  shall be
entitled to exchange  their  Warrant  Shares for  securities  or other  property
deliverable upon such disposition,  dissolution, liquidation or winding up. Each
such written  notice shall be  sufficiently  given if addressed to Holder at the
last address of Holder  appearing  on the books of the Company and  delivered in
accordance with Section 17(d).

         16. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding,  it will reserve from its authorized and unissued Common
Stock a  sufficient  number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant.  The Company
further  covenants  that its  issuance of this  Warrant  shall  constitute  full
authority  to its  officers  who are charged  with the duty of  executing  stock
certificates  to execute and issue the  necessary  certificates  for the Warrant
Shares upon the exercise of the purchase rights under this Warrant.  The Company
will take all such  reasonable  action as may be  necessary  to assure that such
Warrant  Shares  may be issued  as  provided  herein  without  violation  of any
applicable law or regulation,  or of any requirements of the Trading Market upon
which the Common Stock may be listed.

         Except and to the extent as waived or consented  to by the Holder,  the
Company shall not by any action,  including,  without  limitation,  amending its
certificate of incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this  Warrant,  but will at all times in good  faith  assist in the
carrying  out of all such terms and in the taking of all such  actions as may be
necessary  or  appropriate  to protect the rights of Holder as set forth in this
Warrant against  impairment.  Without  limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant  Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value,  (b) take all such action as may be necessary or appropriate in order
that the Company may  validly  and  legally  issue fully paid and  nonassessable
Warrant  Shares upon the  exercise  of this  Warrant,  and (c) use  commercially
reasonable  efforts to obtain all such  authorizations,  exemptions  or consents
from any public regulatory body having jurisdiction  thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

         Before  taking any action  which would result in an  adjustment  in the
number of  Warrant  Shares  for which  this  Warrant  is  exercisable  or in the
Exercise Price, the Company shall obtain all such  authorizations  or exemptions
thereof,  or consents  thereto,  as may be necessary from any public  regulatory
body or bodies having jurisdiction thereof.

                                       13
<PAGE>

         17. Miscellaneous.

                  (a) Jurisdiction.  All questions  concerning the construction,
validity,  enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.

                  (b)  Restrictions.  The Holder  acknowledges  that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered,  will have
restrictions upon resale imposed by state and federal securities laws.

                  (c) Nonwaiver and Expenses.  No course of dealing or any delay
or failure to exercise any right  hereunder on the part of Holder shall  operate
as a waiver of such right or  otherwise  prejudice  Holder's  rights,  powers or
remedies,  notwithstanding  all rights  hereunder  terminate on the  Termination
Date. If the Company  willfully and knowingly fails to comply with any provision
of this  Warrant,  which  results in any  material  damages to the  Holder,  the
Company  shall pay to Holder such  amounts as shall be  sufficient  to cover any
costs and expenses  including,  but not limited to, reasonable  attorneys' fees,
including those of appellate  proceedings,  incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights,  powers
or remedies hereunder.

                  (d) Notices. Any notice, request or other document required or
permitted  to be  given or  delivered  to the  Holder  by the  Company  shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

                  (e)  Limitation  of  Liability.  No provision  hereof,  in the
absence of any affirmative action by Holder to exercise this Warrant or purchase
Warrant Shares, and no enumeration herein of the rights or privileges of Holder,
shall give rise to any liability of Holder for the purchase  price of any Common
Stock or as a stockholder of the Company,  whether such liability is asserted by
the Company or by creditors of the Company.

                  (f)  Remedies.  Holder,  in  addition  to  being  entitled  to
exercise  all rights  granted by law,  including  recovery of  damages,  will be
entitled to specific  performance of its rights under this Warrant.  The Company
agrees that  monetary  damages would not be adequate  compensation  for any loss
incurred  by reason  of a breach by it of the  provisions  of this  Warrant  and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

                  (g) Successors and Assigns.  Subject to applicable  securities
laws, this Warrant and the rights and obligations  evidenced  hereby shall inure
to the  benefit of and be binding  upon the  successors  of the  Company and the
successors and permitted  assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders  from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant Shares.

                  (h) Amendment.  This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.

                                       14
<PAGE>

                  (i) Severability.  Wherever  possible,  each provision of this
Warrant shall be  interpreted  in such manner as to be effective and valid under
applicable  law, but if any  provision of this Warrant shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

                  (j)  Headings.  The headings  used in this Warrant are for the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                              ********************
                                       15

<PAGE>

                             IN WITNESS  WHEREOF,  the  Company  has caused this
Warrant to be executed by its officer thereunto duly authorized.


Dated:  February____, 2004
                                         INDUSTRIES INTERNATIONAL, INCORPORATED


                                         By:  ________________________________
                                              Name: Tsui Kit

                                       16
<PAGE>

                         Title: Chief Executive Officer
                               NOTICE OF EXERCISE

To:      Industries International, Incorporated

         (1)____________The  undersigned  hereby  elects  to  purchase  ________
Warrant  Shares of the  Company  pursuant to the terms of the  attached  Warrant
(only if exercised in full),  and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

         (2)____________Payment shall take the form of (check applicable box):

                [ ]        in lawful money of the United States; or

                [ ]        the  cancellation of such number of Warrant Shares as
                           is  necessary,  in  accordance  with the  formula set
                           forth in  subsection  3(d),  to exercise this Warrant
                           with respect to the maximum  number of Warrant Shares
                           purchasable   pursuant  to  the   cashless   exercise
                           procedure set forth in subsection 3(d).

         (3)____________Please  issue a certificate or certificates representing
said Warrant  Shares in the name of the  undersigned or in such other name as is
specified below:

            ___________________________________________

The Warrant Shares shall be delivered to the following:
            ___________________________________________
            ___________________________________________
            ___________________________________________

         (4) Accredited Investor. The undersigned is an "accredited investor" as
defined in Regulation D under the Securities Act of 1933, as amended.

                                            [PURCHASER]


                                            By: ______________________________
                                            Name:
                                            Title:
                                            Dated:  ________________________


<PAGE>


                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)



         FOR VALUE  RECEIVED,  the  foregoing  Warrant and all rights  evidenced
thereby are hereby assigned to


_______________________________________________ whose address is

_______________________________________________________________.



_______________________________________________________________

                                  Dated:  ______________, _______


                                  Holder's Signature:_______________

                                  Holder's Address: ________________



Signature Guaranteed:  ___________________________________________


NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.